US Federal Reserve Hikes Rates
"USD - Federal Funds Rate - Increased from 1.50% to 1.75% as expected."
Well there we go. Another Fed rate hike in the books. Things under Jerome Powell seem to be functioning under normal service.
The US Federal reserved delivered another 0.25% rate hike, pushing things up to 1.75%. They also delivered a well rounded accompanying statement, signalling the likely continuation of rate hikes toward their target of somewhere in the capacity of 4 this year.
The Fed statement highlighted the stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2% inflation.
The now infamous, well depending on who you ask, dot plot continues to indicate that more rate hikes are likely to occur sooner rather than later. Powell even said "2.7% might be the median, but it doesn't say what we think is possible.”
Interestingly hawkish!
Tariffs? What tariffs?
How did Forex Markets React?
Forex markets reacted by dumping the US Dollar. Yep, throw your textbooks out the window again because markets don't work the way that they will tell you that they do.
This reaction to sell the USD was of course because the market had already positioned itself higher, expecting a more hawkish reaction than they got. I'm personally not really sure how much more hawkish they could have been, but that's market positioning for you.
I'll go over some charts later on Twitter, but the majors seem to be retracing their initial moves and have come back to settle at some sort of fair value where we started the day.
I hope you didn't burn the textbooks too badly after all!
What a Fed Rate Hike Means for Crypto Markets
I was sort of shocked to read some analyst opinions stating that they think the Fed raising rates will have a negative impact on crypto markets, because it will behave the same as the stock market.
Umm, I don't understand that line of thinking at all and believe that in the long run at least, there will be a negative correlation between the stock market and cryptocurrency assets.
Crypto is a relative safe haven and doesn't rely on free money flowing in to prop up prices like we've seen in stocks. The stock market cleanout is coming just as soon as it's realised that the free money party is over and these rate hikes are pushing us one step closer to this fact.
It's in fact still uncertainty around regulation that has been a much bigger factor in the price of crypto markets than interest rate expectations and pricing have.
Best of probabilities to you.
Peace ✌🏻.
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